Higher than expected tender prices for Goulburn’s proposed performing arts centre has forced the council back to the market.
It is embarking on a second process aimed at reducing the cost of the 400-seat facility planned for the McDermott Centre.
Councillors at their meeting on Wednesday decided to embark on a staged expression of interest process which could lead to fresh tenders. It pushes out the construction timeframe by at least six months.
The decision follows two companies’ tenders returned last month that were “significantly” above the $12.1 million council budget, according to general manager Warwick Bennett.
At that time, councillors decided to renegotiate with the two companies – Kane Constructions Pty Ltd and TCQ Construction in an attempt to reduce the cost. But operations director Matt O’Rourke told Wednesday’s meeting that only the latter agreed to participate, while Kane Constructions said it was only interested in submitting a fresh tender.
“Some of the opportunities identified by TCQ amended the scope of the project...If scope changes are to be considered, fresh tenders should be sought,” Mr O’Rourke reported.
But this time, things will be done a little differently. Mr O’Rourke recommended that rather than directly calling tenders for construction only of the Brewster Hjorth designed facility, council should hold a staged expression of interest process. A shortlist of companies would then be asked to participate in a ‘value engineering process.’
“We need to find ways to reduce the cost given the advanced stage of design,” Mr O’Rourke told The Post.
”That could be (achieved) through materials, plant equipment and perhaps construction techniques. There could be an array of things within those that could be explored…That’s the best opportunity we believe we have to seek a lower price.”
Mr O’Rourke said each would need to be worked through to check whether cost savings were possible but it was about involving the contractors earlier rather than having a fixed build.
Following value engineering, preferred companies would be asked to submit a fresh tender.
If the price was still above the budget, the offer would be declined. If acceptable, the council would enter into a design and construction contract with the preferred company.
General manager Warwick Bennett would have authority to appoint those companies to take part in the value engineering stage and reports would be submitted to councillors at each stage of the entire process.
They will also have the final say on whether construction proceeds.
Mr O’Rourke was confident of greater interest this time around.
“We had six companies turn up at the (first) pre-tender meeting but only two put in prices. This may be more attractive to them,” he said.
Kane Construction had declined to participate in the expression of interest because it felt it had already devoted enough time and expense to the initial tender.
The council used a similar process with tenders for the Rocky Hill Museum after prices also came back above the budget allocation. Some aspects, such as the rooftop garden, landscaping and finishes were either removed or adapted to achieve a lower price. But the method’s success also depended on several factors, including the market.
“You need to be careful that you’re still getting what you want...It’s a cooperative exercise,” Mr O’Rourke said.
But it will also drag out timelines.
Mr Bennett previously told The Post that the PAC could be finished by the end of 2019. Now it’s forecast for a September, 2020 finish.
Under a tentative timetable, expressions of interest would be called this month, preferred companies chosen in December and a final contractor appointed next May. Building could begin in June, 2019.
Councillors also heard at their meeting that $1,220,310 had been spent so far on the PAC’s early stages. This included $922,884 for investigation and design, $114,704 in staff costs, $105,785 in tender and legal fees, $44,216 on heritage aspects and $40,949 in DA fees and reports.
The actual build is estimated to cost $10.5 million.
Cr Margaret O’Neill requested the breakdown following the October meeting.
On Wednesday, she asked whether councillors should also be given a revised business plan for the PAC. But Mr Bennett said this was not necessary as the total operation would not change.
“We are still predicting a net cost of $300,000 to the community per annum and that amount is in the forward estimates,” he said.
Deputy Mayor Peter Walker replied that while everyone was hesitant when initial prices came back, he was more than happy with the staff recommendation, especially as councillors would make the final decision.
“I see it as just another step in the process. We just need some more facts and figures,” he said.
Cr Walker pointed out that January was a traditionally difficult time to enlist builders but staff needed direction now to start the process.
Mr Bennett previously told The Post that the delays would not affect a $1 million grant from the Federal Government National Stronger Regions program.
The council has secured double the amount expected in grants for the PAC, including $2m from the Veolia Mulwaree Trust, $4.5m from the State’s Regional Cultural Fund, $300,000 from NSW Infrastructure Grants and $100,000 from a Heritage Activation Grant. This totals $7.9m.
The remainder has been factored into the budget.
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